The Economics of Land Degradation

Healthy soils are essential for sustaining economies and human livelihoods. In spite of this, the key ecosystem services provided by soils have usually been taken for granted and their true value – beyond market value – is being underrated. This pattern of undervaluation of soils is about to change in view of rapidly raising land prices, which is the result of increased shortage of land and raising output prices that drive implicit prices of land (with access to water) upward. Moreover, the value of soil related ecosystems services is being better understood and increasingly valued.It is estimated that about a quarter of global land area is degraded, affecting about 1.5 billion people in all agro-ecologies around the world. Land degradation has its highest toll on the livelihoods and well-being of the poorest households in the rural areas of developing countries. Vicious circles of poverty and land degradation, as well as transmission effects from rural poverty and food insecurity to national economies, critically hamper their development process.Despite the need for preventing and reversing land degradation, the problem has yet to be appropriately addressed. Policy action for sustainable land use is lacking, and a policy framework for action is missing. Key objectives of this Issue Paper and of a proposed related global assessment of the Economics of Land Degradation (ELD) are: first, to raise awareness about the need for and role of an assessment of the economic, social and environmental costs of land degradation; and second, to propose and illustrate a scientific framework to conduct such an assessment, based on the costs of action versus inaction against land degradation. Preliminary findings suggest that the costs of inaction are much higher than the costs of action.